How come people say German Shepherds need a house and a yard?

Well german shepherds are working dogs. They need a lot of room, they are large and don't really like being crowded, but if you take him out on runs for long periods of time or take him out for short periods quite frequently then he should be good. Crates need to be large enough that he can moved around freely in them, so the taller and wider the crate is the better for those dogs, outdoors ones can usually accommodate better than the ones in door.